A Woolworths supermarket in Leongatha, 135kms south-east of Melbourne has topped the results board at CBRE’s tenth Premium Property Portfolio Auction (PPPA) with four properties selling for a total of $32.7 million on an average 5.4% yield. 

The freestanding, 3,143 m2 (GLA) Leongatha store sold for $14.3 million on a 5.32% yield to a Melbourne based investor with nine years of a 20 year lease to Woolworths remaining at a current income of $761,000 per annum net.

The tightest yield of the night, which was held at Zagames Ferrari dealership in Richmond.went to the Woolworths Metro Abbotsford property which sold off-the-plan to a South Australian investor for $4.68 million on a yield of 4.93%. A third property, an ALDI store and two shops at Seville, sold to an international investor for $8.02 million on a 5.98% yield, and a fourth property – a 7-Eleven at Armstrong Creek sold to a second Melbourne based investor for $5.72 million on a 5.4% yield.

ALDI store and two shops at Seville, sold to an international investor for $8.02 million

CBRE Director Investments, Mark Wizel, said a high level of pent up demand for premium properties had been driven by the record low cost of debt and the lack of investment opportunities over the first half of 2019.

“With only two freestanding supermarket investment opportunities offered to the market prior to this event it was clear that pent-up demand was a key factor in the clearance rate and the prices achieved. While retail has not been as strong a performer this year this type of predominantly standalone property with a heavy weighting towards a non-discretionary spend tenancy profile, has been a favorite,’’ Wizel said.

Wizel said there had been a noticeable shift in buyer profile over the course of the year.

A 7-Eleven at Armstrong Creek- sold to a second Melbourne based investor for $5.72 million

“Three out of the four buyers were new property market investors whose previous preference for investments had been cash or equities, however, given the low returns and volatility in the stock market, they are now turning their attention towards secure and higher yielding investment properties. I’ve no doubt this trend will continue to play out while global trade tensions and the negative impact on share markets and deposit and bond rates continues,’’ Wizel said.

Head of Premium Property Portfolio Auctions, Joseph Du Rieu, said off-shore investors had also shown a greater degree of interest in retail assets of late.

“The fact that the Australian dollar is now at a point which provides off-shore investors, or those sourcing their funds from off-shore, with an effective discount provides an additional level of incentive,’’ Du Rieu said. 

PPPA Results

Since its inception in 2017 the PPPA platform has successfully sold 54 properties for more than $472 million – including $198 million in supermarket investments – with an average clearance rate of 88%.